We have had a new Prime Minster for only a matter of weeks and Mr Johnson has already polarised opinion nearly as much as the topic that has been front and centre of the nation’s thoughts since David Cameron announced the Referendum back in 2016. ‘Brexit’ has become such a familiar term that it has entered the Oxford English Dictionary and we would suggest that the only word discussed more amongst the British is ‘weather’ (although that seems to generate a lot less friction). However, it does appear that we are coming to the end, with the PM adamant that we will leave the EU on 31st October 2019 with or without a deal.
So, is this a cause for concern?
Firstly, we must emphasise that our role is not to discuss the rights and wrongs of the UK leaving the EU. One would suggest that this is a matter of opinion and on this matter, we offer none. Our main concern is broadly to understand how Brexit, in whatever guise it takes, affects your underlying investments.
So, a better question for us to answer is, should you be worried about your Portfolio? Well, to put it simply, we think not.
Let’s consider what may happen in the short term. Firstly, we may (or may not) be leaving on October 31st. Mr Johnson is adamant that it will happen and others in Parliament are not so sure. This friction will possibly end with a vote of no confidence, which almost certainly will lead us to a General Election. (That may have already happened by the time we get to print, such is the fluid nature of these discussions). All of this brings uncertainty.
But, most importantly, those of you invested through EBS will have a multi asset, risk rated portfolio. The one thing we can guarantee is that nobody is invested 100% in UK Equities. Using a multi asset proposition means that our investment partners can manage your proposition, so as to iron out some of the peaks and troughs of the Stock Market. However, overall performance has to come with an element of volatility, but that in itself can often offer opportunity.
For example, should we leave without a deal on October 31st, the pound is expected to fall sharply against the Euro. Yet, with most FTSE 100 companies generating their profit from markets outside of the UK, this currency change could be seen as a good thing for them.
As well as your asset split and risk, we must also consider your time horizon. If you are fully invested, it is because you have a time horizon that can only be described as long term. As we have said many times before, it is NOT about timing the market, but time in the market. Our role is to ensure that you are invested in a multi asset, risk rated portfolio that best suits your circumstances.
Therefore, whilst there is a lot of heated discussion about Brexit and how it will affect the UK Economy, your underlying investments will only have a small proportion in UK Equities and as discussed before, many of the Companies could benefit from any change that may occur.
We are not saying that this won’t be a difficult time for the UK and we are also not saying that Stock Markets won’t be affected by this. What is more important is that we have been discussing the implications of Brexit for many months now with our Investment Partners and we recognise that the best solution is to ensure we are fully committed to a risk rated multi asset proposition.
Therefore, if that is the case, perhaps you could focus more time concerning yourself with how you are going to spend your money in retirement and less time worrying about shorter term influences from the world of politics.
As always, you are of course most welcome to get in touch if you want to discuss your circumstances and any concerns.